Managing Tariffs in Sage X3

This blog explains how Sage X3 users can handle current and future tariffs within the system without requiring modifications or third-party solutions.

If the standard options don’t fully meet your needs for capturing tariff-related details, a custom solution or the Net at Work Surcharge Module (covered at the end of this blog) may be a better fit.

Purchasing Tariffs Design

Landed Cost with Complimentary Invoice Solution

Part 1: Supplier Cost Structure

Setting a product supplier cost structure with a cost type tariff in % to accrue at receipt.

GL Breakdown:

Now you can see the value of the tariff on the PO:

Below you can see the value of the tariff on the Receipt:

On both the PO and Receipt, you can view the cost details per line:

You can update the PO (before receipt) or receipt while receiving or after creation to change the value of the tariff by using the line’s “cost structure detail” to impact the accrual. Especially useful if the tariff has been canceled:

The receipt is valued including the tariff:

Part 2: Using Complimentary Invoices to offset the accrual from the custom broker invoice.

At creation of the complimentary invoice, select the line action menu “Pre-loading the line”:

1. Enter the amount of the invoice. It can be higher or lower than the initial accrual
2. Uncheck “New cost”
3. Select the tariff cost

4. Use the left panel’s “Receipt selection”, to select line on which the tariff applies:
   

GL Breakdown:

Note: Any variances from the amount accrued at time of receipt will automatically be reclassed from the accrual account to inventory or variance.

Pros of using Sage X3’s native functionality for tariff management:

• Out of the box configuration, no modifications are needed.
• Limited setup and training (especially on complimentary invoices to offset the accrued cost, which is slightly different from what clients are used to doing with a new cost).
• Receipt accrual should be low variance for tariffs, as tariff rates are supposed to last several months.
• Easy to update if there are changes in tariffs.
• You can see the details on the PO and receipt “costs” tabs.
• If a product is sourced from multiple suppliers from different countries subject to different tariffs, you can easily set a different percentage per supplier-product combination.

Con of using Sage X3’s native functionality for tariff management:

• Out of the box functionality does not allow different landed cost types to have separate GL accounts. The landed cost account is designated on the product accounting code shown on line 73 in the image below.
  

Part 3: Sales Tariff Design

Below are four distinct solutions available depending on how you choose to apply tariffs.

1.     Invoice Element Solution – Create an invoice element to add % to each invoice.

Pros of this method:

• Straight forward.
• Out of the box configuration, no modification required.
• Can break out the value of the tariff on the invoice without giving too much information line by line.
• Allows break out in the GL.
• Can easily change percentage on a transaction-by-transaction basis.

Cons of this method:

• Broad calculation based on the entire invoice of the order and not product specific.

2.     Price List Solution (Gross Price) – Increase your price list for the gross price calculation or create a tariff price list in percentage form for discount and charge to increase the net price.

Pros of this method:

• Straight forward.
• Out of the box configuration, no modification required.

Cons of this method:

• It can be tedious to identify which product is subject to what increase.
• If you don’t have Net at Work’s Price List Module, the update may be tedious.
• No detail for your customer. Everything is merged into gross prices if you increase your gross price.
  • Workaround for this – A separate price list for tariff charges can keep details.

3.     Base Price Solution – Using the base price as the gross price in order to increase it by a tariff based on the last cost.

For example – Change the price list setup with a price processing set as the calculation:

• [[F:ITM]BASPRI+0.15*[F:ITV]LASRCPPRI for a base price + 15% on last receipt cost.
  

Pros of this method:

• Straight forward.
• Out of the box, no modification required.

Cons of this method:

• Limited application to clients that use based price as their gross price.
• No detail for the client’s customer, everything is merged into the gross price.
• Once your last receipt cost is incremented by a tariff, it doubles down on the mark up.

4. Charge / Discount Solution (based on the last cost)

• Create a Charge / Discount dedicated price list based on the last purchase cost.
• Update the price structure for an “adder” as Tariff and link to an invoicing element.
  
• Create a price list with no price value, just the tariff charge set to “yes.” This can apply to everything, including specific products and statistical groups for example.
  

• Next, export your products subject to tariff with their last receipt cost.
• Add a column, in Excel, to calculate the value of the tariff, for example apply 15% on the last receipt cost, it could be different % per product if they are from different origins.
• Import the price list with the product and that new column for the Tariff.
• Tariff amount will be calculated based on price list and display at the sales invoice/order line level. It will also be posted back to the invoice element and a separate GL account.
  

Pros of this method:

• Relatively easy to implement.
• Basing the tariff on the cost.
• Can break out the value of the tariff on the invoice without giving too much information line by line. However, if you want the detail at the line level, then the structure can be changed so it is not linked to an invoicing element.

Cons of this method:

• It’s not dynamic.
  • But this prevents future receipt prices from including the tariff.
• The export, calculation and import to a price list can be cumbersome for some.
  • If you have manufactured products, the calculation of the tariff cost might be especially complex.
  • Have components from multiple sources with different tariffs.

5.     Charge / Discount Solution (% of Sales Price)

• Create a Charge / Discount dedicated price list based on percentage of sales price.
• Update the price structure for an “adder” as Tariff and link to an invoicing element.
  
• Create a price list with no price value, just the tariff charge set to “yes.” This can apply to everything, specific products or by statistical groups for example.
  
• The tariff percentage will be calculated based on a price list and display at the sales invoice/order line level but will be posted back to the invoice element and a separate GL account.

Pros of this method:

• Easy to implement.
• Out of the box configuration. No modification required.
• Can break out the value of the tariff on the invoice at header level but also provide line level information as needed.
• Allows break out in the GL.
• Price list flexibility allows you to pick which products will have the tariff applied.
• Can quickly modify percentages as they change.

Cons of this method:

• Assuming products requiring the tariff are easily identified by product fields such as category or statistical codes.

Important to note: For solutions where the tariff uses invoice elements, changes to the invoice crystal report may be necessary to properly show the invoice element.

Part 4 – Net at Work’s Solution

Net at Work has developed a Product Surcharge module that has multiple applications capable of handling tariff configuration.

The module is required when:

• You need to expand the cost structure beyond the maximum nine discounts and charges allowed when utilizing Sage alone.
• You require or prefer a detailed breakout in the GL by surcharge as opposed to one landed-cost accrual account.

Benefits of the NAW Product Surcharge Module include:

• Automated Surcharge Calculation: The module automates the calculation of surcharges based on predefined rules, reducing manual errors and saving time.
• Flexibility in Pricing: It allows for flexible pricing adjustments, including percentage-based surcharges and fixed amounts, ensuring accurate cost management.
• Enhanced Revenue Management: By incorporating surcharges, businesses can better manage revenue streams and account for fluctuating costs, such as commodity price changes.
• Supplier and Customer Alignment: The module supports different surcharge rates for suppliers and customers, providing a cushion for price fluctuations and ensuring profitability.
• Exception Rules: The module supports defining exceptions to standard surcharge rules, allowing flexibility in handling different tariff scenarios.
• Comprehensive Reporting: Detailed reporting features help track surcharge applications and their impact on overall pricing and profitability.

Conclusion

We hope this week’s Sage X3 Insider Blog was informative and helpful for those of you managing tariffs in Sage X3.

If you have any questions or want to learn more about Net at Work’s Product Surcharge Module, please don’t hesitate to contact us. We’re always here to help.